For the next few months we will be likely to see an uneasy calm, where little changes
This year will play out in two halves for fashion retail as for the rest of the economy - pre- and post-election.
The first part of the year will probably continue to be underpinned by the huge boost to consumers’ disposable income provided by low interest and mortgage rates. Unemployment has risen, but not to the cataclysmic levels that some had predicted. Impending tax rises already announced will be at the back of shoppers’ minds, but they rarely affect buyer behaviour until they make a dent in the pay packet. So for the next few months we will be likely to see an uneasy calm, where little changes. Then the election will come.
We are rapidly counting down the days until Gordon Brown’s government will no longer have any choice in the timing of the vote:it must happen in the first half of the year, on or before June 3. It’s now just a question of when.
Nobody can predict with any certainty what the outcome will be, so nobody can say what the government - the single largest player in the economy - will do and what the results of its actions will be.
It is clear that whoever is elected will take measures to address the truly monumental public deficit, but the way in which they address it will only really become clear after the poll. There are dangers in excessive borrowing, as the UK’s ability to borrow depends on the willingness of the markets to lend, just as there are dangers in public expenditure cuts: where state expenditure accounts for 40% of the economy, cuts in public spending can have big effects on the economy as a whole.
Only when the whistle blows for the second half will we have a much better idea of the likely final scoreline for retail.
Alan Hawkins is chief executive of retail industry trade body the BHF-BSSA Group